The Channel Alone Won’t Sell for You in Asia: You Need The People

For most new market entrants in Asia Pacific, an indirect sales strategy is the fastest, most cost effective, and most scalable way to sell IT products and services in the region’s geographically distributed and culturally diverse markets.

Channel partners in Asia will provide you with market information, access to customers, and a portion of time of product managers, sales people, and technical resources. However, the channel will not sell for you in Asia.  What I mean by this is that most channel companies will not proactively market, generate leads, and aggressively sell a new product that is not supported by a brand, a marketing budget, and strong local support.

Why? A few reasons:

1. Most of the sales people at channel companies in Asia are very young, have compensation plans with about 50% variable components, and are assigned a large number of products to sell. They sell what is easy and fast. They would rather sit with their mouth open and wait for roast duck to fly in than to invest a lot of time and effort in evangelizing a new product.

2. Both junior and senior sales people in Asia are rightfully very protective of their reputation. Your product is just another product to them. There were products last year, there will be products next year. Their customers, on the other hand, are their rice bowls forever. Asia as a whole is huge, but most channel companies in Asia focus on a specific city, a specific vertical, and/or a specific product range. They have an infinite number of products to sell to a very finite number of customers. Their relationships with and reputation amongst their customer community is their life blood. Their worst nightmare is to present a product to a customer and have the demonstration fail or encounter questions which they cannot answer. If they think there is a risk of this happening with a new product, they will simply choose to sell lower-risk products.

3. Every sales person knows that every customer that considers becoming an early adopter of a new product will push for reference customer discounts and/or other encouragements. This takes money out of the sales person’s pocket.  So, even if you offer the channel COMPANY thirty or forty percent margins, the channel sales PERSON will be more inclined to sell an established brand product with much lower margins.

Map out the Sales Process
So, why do you need the channel? In some cases, the answer is that you don’t. If your product isn’t mission critical, is targeted to easily identifiable and contactable customers, doesn’t require local pre-sales or post-sales support, and offers a significant advantage over your customers’ available alternatives, selling direct may be a better option. However, few IT products meet those criteria. Most vendors will need a local presence to succeed in each of the countries of Asia and working with channel partners is simply the fastest and easiest way to establish that local presence.

You may now be wondering, “So, if I need the channel to sell and the channel won’t sell for me, what should I do?” Great question! First, analyze your sales process. Map out everything that has to happen along the journey to you getting a purchase order in your hot little hand. In many cases, that process will look something like this:

Generate lead –> Obtain requirements information –> Present product –> confirm interest –> submit proposal –> Proof of Concept deployment –> negotiation –> contracting

Map out your process and consider which steps your channel partners can be realistically expected to do on their own. If you find that you’ve got lots of steps in the process that your partners can’t or won’t do on their own, you have to figure out how those steps will get done.

Two-pronged Solution:
In our experience, the solution is often a two-pronged fork. First, you need to have at least one commercial manager in the region. Call him a channel manager, regional Managing Director, Partner Ambassador or whatever you want. You need a person whose focus every day will be to communicate with each partner about the business they are developing and where they are and how you can help with the active opportunities they are pursuing.

Second, you also need technical resources. I cannot stress enough the importance of your partner having technical competence with and confidence about your offering. You may well have a reseller agreement that states that your partner is required to assign, train, and certify X numbers of engineers to support your product. Those engineers, however, have a dozen other products to support. With so many products to support, it would be difficult for even the most talented engineer to maintain depth and proficiency with each….and, the sad truth is, most of the engineers at channel companies aren’t all that talented to begin with. The channel companies pay peanuts and get monkeys. So, who ends up showing your product to your prospects? An engineer who you wouldn’t have hired to support your product  exclusively and who is struggling to keep up with 7 different products. You might not see him struggle, but the channel company’s sales people sure do and they tell themselves they will never again bring this guy to present this product to one of their important customers.  You just got taken out of the market and you don’t know it happened.

So, what to do about it? Our preferred approach is to select one main distributor or reseller in each country and co-fund a dedicated product manager / pre-sales SE team. Depending on the product, it could be a team of one, but it’s usually two or three people. The level of people you will want on the job in South and South East Asia will cost somewhere between US$1000 and US$1500 per month. If you can’t justify a $1000 monthly expense to achieve optimum performance from a partner in a market, then you have no reason to do business in that market.

The agreement with the partner should have the following components:

• Sales target for first 3, 6, 12 and 24 months
• Resources to be dedicated to achieving those results
• Percentage of the salary cost you will cover
• You have ultimate decision authority on the hire / fire decisions
• You manage the team as though they were your dedicated employees.

This gives you access to the channel company’s customers, the ability to assure customers of on-going local support, and the focus, visibility, and control you need to help the partner drive the business.

But remember,  success in Asia is the result of daily execution, not flashes of business development brilliance and distribution deal closing. People, willing, able, local, and focused people are the only devices on Earth that can consistently execute a business strategy. You need the people.

Asian Century Solutions (ACS)
Asian Century Solutions (ACS) is a Singapore-based company that enables clients to assess, launch and grow their business in 18 countries across Asia Pacific, including Japan, China, India, Indonesia, Singapore, Australia, Philippines, Vietnam and other Asia Pacific markets. ACS helps clients generate revenue - and develop Asia market knowledge, perspectives, and relationships - BEFORE making HR, infrastructure and other long term business investments in Asia. Read more about its Channel Development Services.